Breaking illusions and how to move forward without waiting for the return of 2021 funding conditions
This article was originally published in Norwegian in Shifter.no by me. This one is a translated version to English.
I’m diving into this article with a cup of coffee in one hand and the unfiltered experiences of steering Tørn through the startup wilderness in the other. Now, don’t get me wrong — Tørn has been on a roll, doubling its revenues year over year, building two Nordic markets in just three and half years, and reducing the waste in the industry by nearly 4000 tons. But, here’s the kicker: securing funding has been, well, a journey filled with twists, turns, and more than a few bumps.
Let me be real with you. Despite our success, the funding game hasn’t been a walk in the park. There’s been sweat, late nights, and a fair share of head-scratching moments. Like many of you, I could have fallen into the comparison trap. We’d see others, with perhaps less traction, unclear value proposition, and business model or a different story, grabbing funds at mind-boggling valuations, and suddenly, doubt crept in.
“Are we doing something wrong? Are we not shouting our achievements or the impact we are creating loud enough? Is there a secret handshake we’re missing? Am I falling into the poor funding statistics of female-founded companies? “ Sound familiar? It’s a toxic cycle that’s anything but constructive. I have never been a fan of going down that path.
So, here I am, not as a startup guru, but as a founder knee-deep in the hustle with Tørn, witnessing the seismic shifts of 2023 and feeling the pulse of 2024. It’s time to stop waiting for a 2021 revival and start talking about the art of not fooling ourselves in the world of startups. Because in 2024, it’s not just about building unicorns; it’s more than ever about building something enduring, and that’s a journey worth sharing.
Navigating the Current Landscape: Real Talk from the Trenches
Forget the Past: Embrace the Present
In 2021–2022, the investment scene resembled a wild party where almost any idea could secure funding. The aftermath has been sobering. Most startups funded during that period failed to live up to expectations, leaving investors wary and cautious.
Stop reminiscing about the golden age of 2021. The irrational exuberance of 2021 won’t repeat itself (for quite some time, if it ever does), and the sooner we accept this, the better prepared we will be for the challenges ahead.
Focus on the here and now. Adapt to the changes, if necessary, revamp and set realistic expectations.
Getting Real: Facing the Uncomfortable Truths and asking difficult questions
As startup founders, it’s time to ask the tough questions. Why did you start a company? What motivates you beyond the allure of quick funding and high valuations? The journey ahead is more arduous than ever, but the personal rewards in learning and achievement can be even more satisfying.
Starting and scaling a company is now more than ever not for the faint of heart. It requires resilience, adaptability, and a genuine commitment to solving real and more importantly big-enough problems . The days of easy money are over, and only those with a solid foundation and a clear value proposition will thrive.
Back to Fundamentals
If you don’t have revenues or significant customer traction, hustle and prioritize these before seeking investment and investors. You will just be wasting your precious time and energy that should be used on solving your business problems
Explore alternative funding sources like grants or consulting work to sustain your startup.
Be Cost-Efficient and Keep a Close Tab on Input and Output
In the era of 2024, it’s not just about the big ideas; it’s about being lean and mean. Keep a hawk-eye on your expenses, ensuring every kroner spent adds value. Cost efficiency isn’t just a buzzword; it’s a survival tactic.
Prioritize Hands-On Team Members Over High-Profile Managers
In a startup, you need soldiers, not just generals. Your scarce funding should go into a team willing to hustle, get their hands dirty, and grind with you. High-profile managers might look good on paper, but in a startup, it’s the doers who make things happen. Use the big shots as advisors, not as your core team.
Leverage Your Network
Friends, family, and existing investors are more likely to support you in challenging times. Rely on your network before seeking funding from strangers.
Attractive Valuation and Investor-Friendly Terms
Be realistic about your startup’s value. Lower valuations are more attractive in the current climate. Offer preferred equity, provide a seat on the board, and be transparent about terms.
Clearly articulate how your business will make money. Demonstrate a deep understanding of your market, competition, and potential challenges. Be transparent about the risks and opportunities. Acknowledge the risks and challenges, and present a robust strategy for mitigating them. Investors want to see a well-thought-out plan that has considered potential pitfalls.
Investors are still willing to invest, but the liability is on founders to present a compelling opportunity. Show them a good deal, and they’ll be more likely to open their wallets.